Microsoft has asked Intel to develop a 16-core version of its low-power Atom chip for use in servers, part of a wider effort to reduce power consumption in its massive data centers, a Microsoft executive said Thursday.

There's a "huge opportunity" to improve energy efficiency by using servers based on small, low-power chip designs such as Intel's Atom and Advanced Micro Devices' Bobcat, said Dileep Bhandarkar, a distinguished engineer with Microsoft's Global Foundation Services, which runs the company's data centers.

The small chips use little power because they were designed for use in mobile computers such as netbooks. But they are also more energy-efficient for some server workloads than processors like Intel's powerful Xeon chips, Bhandarkar said in a speech at The Linley Group Data Center Conference in Silicon Valley.

Microsoft's data centers power mostly Web-centric applications like Bing, Hotmail and Windows Live Messenger, as well as hosted versions of business applications such as Sharepoint and Exchange.

It's no secret that Microsoft and other big data-center operators are experimenting with small, low-power chips. Vendors such as Dell are already selling servers based on Via's Nano processor. Bhandarkar's comments show Microsoft's keen interest in alternative designs and that it has made some specific requests to Intel and AMD.

The processors should also use a more integrated, system-on-chip design, he said. "When you look at these tiny cores, another way of making them work in a very efficient way is [not to] surround them with a whole bunch of south bridges and network controllers. ... Essentially, the tiny cores and systems-on-chip should go together."

Microsoft has enough buying power to pressure vendors into designing equipment that meets its specifications, and Intel is likely to release an Atom chip for servers eventually, said Linley Gwennap, founder and principal analyst at The Linley Group.

"I think Intel is going to have to do it at some point. We're seeing more of the ARM guys going after the server market and just to compete on power performance per watt, Intel is going to have to rely on the Atom CPU," he said.

Bhandarkar said there may be a role at Microsoft for ARM-based servers, but he also said the architecture faces significant hurdles. "If ARM can show us enough value over an x86 solution we might consider that," he said. But there has to be a clear performance benefit.

"Instruction-set transitions are extremely painful," Bhandarkar said. "As a general rule of thumb, you have to have a sustainable improvement per dollar per watt of at least 2x -- some would say 5x -- but it's at least 2x" to make it worthwhile.

"For some apps where you don't have that dependency the number could be smaller," he said. "ARM's an interesting thing to look at and, if nothing else, if it lights a fire under Intel and AMD to deliver more effective x86 solutions, I'm happy."

Microsoft said recently it would port Windows to ARM processors for use in mobile devices such as tablet computers. But that's different from PCs and servers, Bhandarkar argued, which are expected to run a wide range of existing software.

Gwennap too said ARM processors could play a part in data centers. And while they are likely to be used initially by large Internet companies and collocation providers, they may also be used in the enterprise for some applications.

"Clearly software is a big barrier, but some customers are willing to work with that," he said. "It's going to be a longer-term thing, but if ARM can get established in large data centers first and then migrate to enterprise applications, there could be some momentum there."

An Intel spokesman noted that HP sells a home media server with an Atom processor, but Intel has "no announcements to make" regarding Atom chips for data centers, he said.

He also noted that Google and Microsoft have, in the past, argued in favor of more powerful chips. "[A]lthough we're enthusiastic users of multicore systems, and believe that throughput-oriented designs generally beat peak-performance-oriented designs, smaller isn't always better," Google wrote in a research paper last year.

But Bhandarkar said there are diminishing returns in moving to chips with more cores and higher clock speeds, at least for Microsoft. The company looks at performance per watt per dollar when choosing hardware, and the performance gains from beefier chips don't make up for the increase in power use, he said. "So in many of our configurations, we only populate one socket with a quad-core" processor, he said.

Processors are just one part of the energy-efficiency equation for Microsoft, which looks at its data centers holistically. It provides server makers with fairly strict specifications and asks them to compete for its business.

It has installed servers with no fans, for example, moving them to the rack level instead for greater efficiency. It also specifies servers with no CD or DVD drive, fewer DIMM slots and PCI cards, and power supplies rated to the Gold or Platinum standard by the Climate Savers Initiative.